Business

U.S. rejects plans for Kenosha casino

The federal government has rejected the latest bid to open a huge Indian casino in Kenosha's Dairyland Greyhound Park, though a spokesman for the project immediately said the tribe would fight the decision in federal court.

"Our project hit another speed bump," said Evan Zeppos, spokesman for the six-year effort to open a $1 billion Menominee Indian casino at the financially ailing dog track, which loses millions of dollars a year. He said the legal challenge would attack rules issued by the Interior Department last year that made it more difficult to receive federal regulatory approval for an off-reservation casino.

"It's a standard not approved by Congress or the regulatory procedure," Zeppos said. "They can't just make up a rule and say this is the new guidance."

The tribe received an 11-page letter with the anticipated rejection of the project by the Interior Department late Wednesday afternoon. A spokeswoman for the U.S. Bureau of Indian Affairs declined to comment.

The bid has been on thin ice since February 2007 when Dennis Troha, the Kenosha trucking magnate who spearheaded the effort, was indicted on charges of illegally funneling about $100,000 in contributions through his children to the campaign of Gov. Jim Doyle and other political funds. Troha, who was a partner in an earlier failed attempt to open a Kenosha Indian casino, left the deal when he was indicted. He later received six months' probation for breaking federal campaign finance laws.

In addition, the effort has faced intense and expensive opposition from the Forest County Potawatomi, a northern Wisconsin tribe that wants to protect its profitable off-reservation casino in Milwaukee. Both the Potawatomi and the pro-Kenosha-casino forces have hired high-powered lobbyists and lawyers.

The new rules

The biggest hurdles to the effort, however, were guidance rules issued last year by the Interior Department.

Among other things, the new rules dictated that the farther a new casino is from the reservation, the tougher it becomes to win approval. The Menominee reservation is located near Keshena, about 200 miles from the proposed casino site. Shortly after those rules were enacted, the government rejected 11 applications for off-reservation casinos.

Department Secretary Dirk Kempthorne has been an outspoken opponent of off-reservation gambling, so the Menominee sought to have the decision on their bid delayed until after the Obama administration took over.

The Menominee filed suit challenging the legality of the rules and asking a federal judge to enjoin the government from acting on the casino application. The motion for the injunction was rejected, though the suit is pending in U.S. District Court in Wisconsin.

A similar court challenge by the St. Croix Chippewa, the tribe seeking to open a casino in Beloit, failed last year and is being appealed.

The financial muscle for the Kenosha project has been coming from the Mohegan Tribe of Connecticut, a casino-rich tribe that is a partner in the Menominee's efforts. The gaming arm of the Mohegan has written off $3.7 million that it invested in the project and set aside reserves for another $8.1 million, meaning it is likely to lose that money as well, according to documents filed with the Securities and Exchange Commission.

The rejection also raises new questions about the viability of Dairyland, the state's only pari-mutuel dog-racing track, which expects to post a $2.48 million loss for 2008.

The tribe has an option to buy land, and Zeppos said it will keep the option as it launches its legal battle to reverse the decision.

Roy Berger, Dairyland's executive vice president, said Wednesday that the track would continue operating as long as the option remains in force.

In recent weeks, however, kennel operators at the track have said they have found it increasingly difficult to make a living at the track. The track's handle, or the amount of money wagered on races at the track, has been dropping, according to state officials.

In addition, concerns have been raised about the condition of the track. However, Berger and other track officials have insisted that nothing is wrong with the track.